A hands-on options curriculum covering real trading concepts. Read the lessons, work through examples, and test your knowledge.
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Lesson 8: 12.8: Order Flow Trading Strategies
Combine CVD, absorption, and footprint imbalances into highly precise execution tactics.
1. The Footprint Rejection Setup
This strategy exploits buying or selling exhaustion at range boundaries:
• Wait for price to approach a key level (e.g., previous day VAH or a major HVN).
• Watch the footprint chart. Look for a failed breakout characterized by a cluster of buying imbalances at the highs followed by a sudden wave of aggressive selling delta.
★ Trigger: Enter short when aggressive sellers step in, placing your stop-loss directly above the failed wick.
2. Trading the CVD Divergence
• The Setup: If price is making a new intraday low, but the CVD line is climbing, this indicates that aggressive sellers have exhausted their capital, and passive institutional buyers are absorbing their panic.
• Execution: Enter long on a confirmed footprint bar, targeting the session POC. Place stop-losses under the swept swing low.
Click to enlargeGEX Heatmap & Dealer Hedging Profile
The Gamma Exposure (GEX) profile dictates the hedging loops of market-makers. Slide the price pointer below to see how institutional hedging flows suppress volatility or trigger cascading market trends.
Price Controller
Gamma Transition Zone (Near $100): Resting near the Volatility Flip Line. Dealer hedging is transitioning, making the price range choppy as dealer flows oscillate. Expect choppy intraday price ranges.
KNOWLEDGE RECONNAISSANCE
If price is making new session lows but the CVD line is trending upward, what is this divergence indicating?
More lessons in this module
- 12.0: Introduction to Order Flow
- 12.1: Order Flow Basics
- 12.2: Bid vs. Ask Mechanics
- 12.3: Market Orders
- 12.4: Limit Orders
- 12.5: Footprint Charts
- 12.6: Delta
- 12.7: Absorption
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